Interest Rates and House Prices in 2009

[d000hg]

Prices need to fall 40% to reach their long term average. And we've only had 20% so far.
And as no one knows the depth or severity of this recession/depression they might fall even more that.
Most commentators expect a huge rise in white -collar unemployment, so I don't see house prices rising any time in the next 2 years.
Save like crazy while you can and build up a big deposit for the bargains that are sure to emerge.

Rising unemployment was the biggest factor I could see that makes short term price rises unlikely. To me it seems likely a slow wave of repossessions and desperate sellers will lag a few months behind the wave of unemployment, since most people won't be forced to sell for at least a couple of months after losing their income.

However I'm uncertain how to get any idea of my own on how much more prices might get. Is your figure of 40% something you've plucked from thin air that 'feels about right' or is there analysis behind it - your own or other sources'?

[sasguru]

Rising unemployment was the biggest factor I could see that makes short term price rises unlikely. To me it seems likely a slow wave of repossessions and desperate sellers will lag a few months behind the wave of unemployment, since most people won't be forced to sell for at least a couple of months after losing their income.

However I'm uncertain how to get any idea of my own on how much more prices might get. Is your figure of 40% something you've plucked from thin air that 'feels about right' or is there analysis behind it - your own or other sources'?

The 40% comes from the graph of average post-war house prices - I think its from the Nationwide or Halifax. It might also be on housepricecrash.co.uk.

In any case if you're any good with excel, you can use the raw data here:

http://www.nationwide.co.uk/hpi/down...since_1952.xls

Basically with all indicators pointing downward, any talk of stabilization in house prices is pure and utter bollux.

[swamp]

I'm going to be putting my flat in London up for sale this year, a forced sale only due to forthcoming baby swamp

There are seven other flats for sale in the same road (there are lots of flats), with two under offer. So it's going to be very difficult to sell, but I think the others look overpriced and I'm prepared to take a bit of a hit to sell in time. I will have a floor price, below which I will rent it out instead.

[Cyberman]

On the other hand, I spoke with my IFA last night and he told me not to get into too much of a panic regarding the increase in activity in January. He pointed out that these figures don't yet actually mean an increase in fully completed sales. He told me that the mortgage lending situation is still extremely, extremely poor. He told me that the other week he had a client with a 25% deposit for a house he wanted, and the client had a reasonable salary and credit history; however, my IFA could NOT get him a mortgage from anywhere. And he told me that this was the first time in his twenty-something years as an IFA that he has NOT been able to get a mortgage for a client that has a good deposit, income and credit rating / no CCJs. He says in the past, the only people he's not been able to get a mortgage for are for those who have CCJs or similar. So from his point of view, the mortgage lending situation really is extremely terrible. And that is one reason why things can't just suddenly pick up overnight.

This is very true. Banks are advertising mortgages, but when it comes to the crunch(excuse the pun!!) they are refusing for spurious reasons. Many of the mortgages advertised are just window-dressing to keep HMG happy.
Until mortgages are freely available to those with a good credit-record you can forget any major recovery, however, I do not see house prices falling much from current lows. If you can get a mortgage and see the house of your dreams, buy it, because in the long-run it will appreciate in value anyway.

[sasguru]

however, I do not see house prices falling much from current lows.

[Cyberman]

[BlasterBates]

heard a discussion on Radio 4, about house prices at around Christmas. An expert said house prices had already dropped 25% for anyone wanting to sell at that time (just takes time for the statistics to catch up), and it would fall another 20-25% in 2009. Also heard an analyst in late 2007 or early 2008 on Bloomberg TV, who said a 40% drop in UK house prices was realistic.

Stocks are already low, so I would reiterate buying stocks, and keep clear of property for the forseeable future. This is what Warren Buffet and George Soros recommend.

[DimPrawn]

heard a discussion on Radio 4, about house prices at around Christmas. An expert said house prices had already dropped 25% for anyone wanting to sell at that time (just takes time for the statistics to catch up), and it would fall another 20-25% in 2009. Also heard an analyst in late 2007 or early 2008 on Bloomberg TV, who said a 40% drop in UK house prices was realistic.

Stocks are already low, so I would reiterate buying stocks, and keep clear of property for the forseeable future. This is what Warren Buffet and George Soros recommend.

But not just any stocks. Choose the ones that are going to go up rather than go bankrupt or make huge losses.

HTH

[Cyberman]

Stocks are already low, so I would reiterate buying stocks, and keep clear of property for the forseeable future. This is what Warren Buffet and George Soros recommend.

Stocks are low for a very good reason, and that is because the risk is so high. Try telling owners of banking shares that they are worth buying for the long-term, when nationalisation is gradually creeping up and has already lost some a fortune. I personally think that all bank shares could be nationalised within a year, and with little or no compensation.
Car and component manufacturing is also in the doldrums and many of these companies will also go bust.
I just cannot agree with your logic, as unemployment is predicted to double over the next 18 months, and stocks are reliant on economic recovery, not economic demise.

[oracleslave]

Stocks are low for a very good reason, and that is because the risk is so high. Try telling owners of banking shares that they are worth buying for the long-term, when nationalisation is gradually creeping up and has already lost some a fortune. I personally think that all bank shares could be nationalised within a year, and with little or no compensation.
Car and component manufacturing is also in the doldrums and many of these companies will also go bust.
I just cannot agree with your logic, as unemployment is predicted to double over the next 18 months, and stocks are reliant on economic recovery, not economic demise.

Do you have any spare room in that padded cell Blaster?